Amazon advertising in 2026 is a $50+ billion ecosystem that has fundamentally changed how brands compete on the platform, with average CPCs up 15% year-over-year and new ad formats like Sponsored TV and AI-powered creative tools reshaping the landscape. I am Andrew Morgans, founder of Marknology in Kansas City, and after managing Amazon advertising across 300+ brands for over a decade, the brands winning in 2026 are the ones treating Amazon ads as a full-funnel marketing channel, not just a keyword bidding game.
In This Article
- What Does the Amazon Advertising Landscape Look Like in 2026?
- How Much Does Amazon Advertising Cost in 2026?
- What New Ad Formats Are Available in 2026?
- Is Amazon DSP Worth It for Smaller Brands?
- How Is AI Changing Amazon Advertising?
- What Advertising Strategy Works Best in 2026?
- What Are the Biggest Amazon Advertising Mistakes in 2026?
- Frequently Asked Questions
What Does the Amazon Advertising Landscape Look Like in 2026?
Amazon's advertising business has grown into the third-largest digital ad platform behind Google and Meta. Here is where things stand in 2026:
- Ad revenue: Amazon's ad business generates over $50 billion annually, up from $38 billion in 2023
- Advertiser competition: Over 2 million active advertisers compete for placement, a 25% increase from 2024
- Average CPC: $1.20 to $1.80 for Sponsored Products (varies dramatically by category)
- New placements: Sponsored TV, Sponsored Display video, and AI-generated ad creative are now mainstream
- Attribution: Amazon Marketing Cloud provides enterprise-level attribution data previously unavailable
- Full-funnel capability: Amazon now supports awareness, consideration, and purchase campaigns in a single platform
Pay per click is really just a godsend to launch products and get sales. Understanding that 60% of whether a product succeeds is the product itself, and then the other 40% is the execution, which includes doing really good PPC ads. - Andrew Morgans on Startup Hustle
How Much Does Amazon Advertising Cost in 2026?
Amazon advertising costs vary significantly by category, competition level, and ad format. Here are current benchmarks:
| Ad Format | Avg CPC 2026 | Avg ACoS |
|---|---|---|
| Sponsored Products | $1.20 to $1.80 | 20% to 35% |
| Sponsored Brands | $1.50 to $2.50 | 25% to 40% |
| Sponsored Brands Video | $0.80 to $1.50 | 15% to 30% |
| Sponsored Display | $0.50 to $1.20 | 30% to 50% |
| Sponsored TV | CPM $15 to $35 | Brand awareness (no direct ACoS) |
High-competition categories like supplements, beauty, and electronics see CPCs 2x to 3x above these averages. Lower-competition categories like industrial, pet, and home goods tend to be below average.
What New Ad Formats Are Available in 2026?
Amazon has introduced several new ad formats that are changing the game:
- Sponsored TV: Stream ads on Fire TV, Twitch, and Amazon Freevee with no minimum spend. This brings TV-style brand advertising to sellers of all sizes
- Sponsored Brands Video (expanded): Now available in more placements including search results, product pages, and category pages
- AI-generated ad creative: Amazon's AI tools generate product lifestyle images and video from your product photos. Available directly in the ad console
- Sponsored Display audiences: Target audiences based on lifestyle, interests, and purchase behavior, not just product targeting
- Amazon Marketing Cloud (AMC): Enterprise analytics that let you build custom attribution models and audience segments
Sponsored Brands Video continues to be the highest-ROI ad format for most sellers. It combines visual storytelling with direct purchase intent, and CPCs remain lower than standard Sponsored Products in many categories.
Is Amazon DSP Worth It for Smaller Brands?
Amazon DSP used to require a $35,000+ minimum spend and was accessible only through managed service. In 2026, self-service DSP is available to brands spending as little as $5,000 per month, making it viable for mid-size sellers for the first time.
DSP is worth considering if you:
- Want to retarget shoppers who viewed your products but did not purchase
- Need to build brand awareness beyond Amazon search results
- Sell products with longer consideration cycles (high-ticket items, premium brands)
- Want to reach Amazon audiences on external websites and apps
At Marknology, we typically recommend DSP for brands doing $1M+ annually on Amazon. Below that threshold, Sponsored Display retargeting provides similar functionality at lower cost.
How Is AI Changing Amazon Advertising?
AI is transforming Amazon advertising in three major ways:
- Automated bidding: Amazon's AI bidding algorithms have improved dramatically. Dynamic bidding (up and down) now outperforms manual bidding for 70% to 80% of campaigns in our testing
- Creative generation: Amazon's AI image generator creates lifestyle product photos from white background images. Quality has improved enough to be useful for Sponsored Brands placements
- Audience targeting: AI-powered audience segments in Sponsored Display and DSP identify high-intent shoppers more accurately than manual targeting
The brands that are winning with AI advertising in 2026 are using it as a baseline that human experts then optimize. AI handles the repetitive bid adjustments and audience discovery. Human strategists focus on creative direction, campaign structure, and business strategy. This is exactly how we approach it at Marknology.
What Advertising Strategy Works Best in 2026?
The most effective Amazon advertising strategy in 2026 is full-funnel, meaning you invest in all stages of the customer journey:
- Top of funnel (awareness): Sponsored TV, Sponsored Brands, DSP prospecting
- Middle of funnel (consideration): Sponsored Brands Video, Sponsored Display contextual targeting
- Bottom of funnel (purchase): Sponsored Products, Sponsored Display retargeting, coupons
Brands that only run Sponsored Products are leaving growth on the table. Our clients that adopt full-funnel strategies see 20% to 40% higher total sales than those running bottom-of-funnel only, with similar or better overall ROAS.
What Are the Biggest Amazon Advertising Mistakes in 2026?
- Only running Sponsored Products: You are competing in the most expensive ad format and ignoring cheaper, high-ROI options
- Set-it-and-forget-it campaigns: Amazon advertising requires daily monitoring. Automated bidding helps, but human oversight is essential
- Ignoring video: Sponsored Brands Video has the best ROI for most sellers. Not having video is a competitive disadvantage
- No brand defense: If you are not bidding on your own brand terms, competitors are stealing your traffic
- Chasing low ACoS at the expense of growth: A 15% ACoS with flat sales is worse than a 25% ACoS with 50% sales growth
Hear more advertising insights on the Startup Hustle podcast where I regularly discuss PPC strategy with industry leaders.
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Book Your Free CallFrequently Asked Questions
How much does Amazon advertising cost in 2026?
Average CPCs for Sponsored Products in 2026 range from $1.20 to $1.80, with Sponsored Brands at $1.50 to $2.50 and Sponsored Brands Video at $0.80 to $1.50. Costs vary significantly by category and competition level.
What is the best Amazon ad format in 2026?
Sponsored Brands Video offers the best ROI for most sellers in 2026, combining visual engagement with purchase intent at lower CPCs than standard Sponsored Products. Every brand with video assets should be running this format.
Is Amazon DSP worth it for small sellers?
Amazon DSP is now accessible for brands spending $5,000+ per month. Marknology recommends DSP for brands doing $1M+ annually on Amazon. Below that, Sponsored Display provides similar retargeting capabilities at lower cost.
How is AI changing Amazon advertising?
AI in Amazon advertising is improving automated bidding, generating creative assets, and building smarter audience segments. The most effective approach is using AI for baseline optimization while human experts handle strategy and creative direction.
What is a good ACoS on Amazon in 2026?
A good ACoS depends on your margins and goals. For most brands, 20% to 30% ACoS is healthy. New product launches may run 40% to 50% ACoS intentionally to build ranking. Focus on total ROAS across all campaigns rather than individual campaign ACoS.
Should I hire an Amazon advertising agency?
If you are spending more than $5,000 per month on Amazon ads or managing more than 20 SKUs, an experienced agency like Marknology in Kansas City typically delivers better results than in-house management due to cross-category expertise and dedicated attention.
What percentage of Amazon sales come from advertising?
For most brands, 30% to 50% of Amazon sales are directly attributable to advertising, with the remaining driven by organic ranking that advertising helped build. The halo effect of advertising on organic sales is significant and often undervalued.